Vodacom plans to launch a new virtual card product through its tie-in with Visa, which will allow subscribers to transact in ways akin to traditional bank customers, such as shopping online.
The company, like a number of mobile providers operating in Africa, including Airtel, Orange and MTN, has bet big on financial services as an area of current and future growth.
While Africa’s largest mobile operator, MTN, has 61-million active monthly mobile money users across 16 markets, Vodacom and Safaricom’s M-Pesa platform have more than 73.5-million subscribers in seven countries.
The head of Vodacom financial services, Mariam Cassim, says partnerships are core to how the group’s financial technology unit operates.
The group has several offerings under its financial services umbrella, including mobile payments, insurance and lending. In many instances, the company will partner with banks or payment providers to bring its offerings to market.
“The pace at which technology is evolving is just unbelievably fast,” Cassim told Business Day. Any organisation that thinks it has all the resources to be able to do everything itself is fooling itself, she said.
Partnering with Visa on a virtual card makes sense. “We’ve got a great partnership with Visa, as an example, where we will be launching a virtual card linked to our VodaPay wallet and that’s due quite imminently. So that again is a different type of partnership, but an important one and a strategic one for what we want to do.”
A virtual card is a digital representation of a physical bank card. Just like a physical card, it has a unique 16-digit card number, expiry date and CVV code. However, virtual cards do not have a physical card associated with them.
Virtual cards are typically used for online transactions where they are said to provide an extra layer of security. When one uses a virtual card for an online purchase, the merchant does not store the actual credit card information.
Doing something better
“We’re humble enough to believe there may be organisations out there who may be doing something better than we could do if we try do it ourselves. It could be better, it could be cheaper, it could take us quicker to market.”
In other instances, as with its insurance unit, Vodacom has chosen to build its own technology and get its own licence.
“It would depend on the circumstances around the product proposition at that point. Based on that, we would make the decision whether we want to do it fully internally, whether we want to outsource completely, or whether we want to do a hybrid model,” Cassim said.
The group has also been growing its loan book through advancing airtime and lending funds to small businesses.
“We’ve got a great SME lending product that we launched a few years ago. It’s a fully digital experience that allows a small business owner to go online, apply for a loan in under 10 minutes and receive a response within one to four hours after application.”
Cassim says this platform has significantly disrupted the loan application process for small business owners.
“This was a product that we partnered with a fintech on because they had developed a great digital journey and we could plug that into our ecosystem with a few enhancements. We have an amazing business now providing loans to small businesses.”
Vodacom recently reported that its financial services customers, including Safaricom on a 100% basis, total 73.5-million, transacting $1bn a day.
Financial services revenue increased 39.9% to R6.2bn for the six months to end-September 2023, contributing 10.5% to group service revenue.
New services in SA, including financial and digital services, fixed and internet of things were up 18.1% and contributed R5.1bn to revenue. In the home market, revenue from financial services grew 10.8% to R1.6bn due to a strong performance from the insurance business.
VodaPay, the group’s superapp, continues to gain traction with more than 7.6-million downloads and 4.1-million registered users.
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